In an age where the quality of life and advances in medical science allow us to live longer than ever before, it’s depressing to hear terms such as ‘longevity risk’ in connection with financial planning for our final years. The unfortunate truth is that many seniors these days outlive their savings and with the cost of living rising at an alarming rate, you might find that your money doesn’t last as long as you initially planned for it. Also, with the implementation of the Living Longer, Living Better reforms instituted by the government in 2014, the cost of residential aged care has increased for many older Australians.
An Aged Care Loan Could Be the Solution
If you find yourself in a position where you own a house but wish to move to aged-care accommodation, you might qualify for a reverse mortgage. Many Australians today own their homes, which means that a substantial amount of savings is inaccessible and tied up in equity unless they decide to sell it.
If you need funds for aged-care accommodation, but don’t want to sell your home because there are still other family members living in it, you want to keep your house for emotional reasons, or in case you decide to return to it, you should consider consulting Reverse Mortgage Finance Solutions aged-care loan advice.
Aged care loans are designed to pay the cost of an aged-care facility without the need to sell your home. This type of mortgage, also called an equity release loan, allows the borrower to access some of the equity of their family home while they still own it, without immediate repayment. The amount borrowed, together with interest and any loan fees that have accumulated will become due at the end of the loan term or when the house is sold whichever occurs first.
The Pros and Cons of Aged-Care Loans in Australia
With an aged-care loan, you can get cash for up to 50% of the value of your property when you need it while still ensuring that a spouse or other family members can continue to live at home. You will have the flexibility to sell your home at the right time. If there is a downswing in the property market at the time when you need money, you can use an aged-care loan to secure funds and delay selling your house until market conditions improve.
Aged-care loans in Australia attract a higher interest rate than some other types of loans, and if you receive a pension from the Department of Human Services, an equity release loan could negatively affect your eligibility. On the other hand, a loan may have a considerably lower impact on your Aged Pension and the Daily Means Tested fee when compared to selling your house to pay for accommodation in an aged-care facility.
When considering aged-care loan solutions, it’s essential to ask a loan consultant to advise you on the pros and cons of reverse mortgage loans and help you to determine the best option for you. Accredited aged-care loan advisors at Reverse Mortgage Finance Solutions have the knowledge and experience to help you find the right equity release loan solution for your needs. Contact us or phone 1800 001 020 to book an appointment with one of our national network consultants.